Unemployment remains a major challenge for the South African Government as the country moves to uplift its previously disenfranchised people. Xiamen University's Ren Peiqiang, a visiting scholar at the Center for Chinese Studies, Stellenbosch University, South Africa, believes the country's strict labor laws and strong trade union culture make many foreign companies reluctant to employ South Africans. His edited thoughts are as follows:  

As a Chinese visiting scholar, when I arrived in Stellenbosch, South Africa, earlier this year, I was overwhelmed by its peaceful beauty. However, my impressions soon changed when I saw a young, healthy-looking man begging for money. I thought: "Why is someone this young begging? Why doesn't he find a job to support himself?" In China, only disabled, poor or old people are beggars. Currently, the South African Government faces the triple challenge of poverty, inequality and unemployment. Creating jobs for the majority of poor South Africans is critical for the country's economic transformation. Unfortunately, due to strict labor laws and strong trade union influence, many foreign companies are reluctant to offer jobs to local people. This is very different from the situation in China, where relations between companies (both local and foreign) and workers are far more flexible, leading to a more efficient business environment.

South African model

In the first quarter of 2012, the official unemployment rate in South Africa was 25.2 percent, but many people estimate that the real figure may be over 40 percent. Manufacturing is South Africa's economic engine;. sub-sectors such as the auto industry and the consumer electronics industry are dominated by foreign companies. Therefore, it is critical that these companies bring jobs to local people. However, many foreign companies believe South African labor laws protect employees too much and that trade unions are excessively powerful.

For example, if an automobile assembly worker is not competent, the company can't fire them directly. According to South African labor laws, the employer needs to send them a warning notice and offer more training. If they make the same mistake, the employer will send them a second warning notice and set a deadline to correct their behavior. If it happens a third time, the employer needs to find evidence for the worker's incompetence and hold an internal hearing so as to fire them legally. If the employer doesn't follow the above procedures, the dismissed employee can lay charges upon the employer. Finally, the employer has to compensate the employee with one or two years' salary and is obliged to employ them again. Within the auto industry, unions will require employers to increase members' salaries every year, (on average at 10 percent per year). Difficulty in firing incompetent employees, together with increasing salaries, makes foreign companies reluctant to employ more South African workers.

Many companies in different industries in South Africa don't want to recruit short-term workers. A manager who has worked in an auto company for four years in South Africa recently informed me that if companies employ short-term workers, it will allow a 5-percent increase in terms of the number of people a given company employs. He continued that if an employer recruits a short-term (three months) worker, he can prolong the contact for another three months if he feels the worker is competent or that the work is not finished. After half a year, if the work is still not done, the employer needs to give the worker a long-term contract. When the work is finished, the worker will become a burden for the employer as the employer finds it is very hard to terminate the contact.

The Chinese model

It is well-known that African countries have abundant labor. It should become one of the sources of comparative advantage. However, many laborers lack basic education and work skills. In China, most laborers have nine-year compulsory education and accept an additional one or two years of technical school for their future jobs. Compared to China, foreign companies in South Africa have to spend more money to train their employees. However, if trained employees require employers to increase their salary as they now have acquired more sophisticated skills. If their salaries do not increase, they will find a better job at a new company. Foreign companies are unable to find legal measures to safeguard their benefits when they train their employees. In China, if new employees cannot excel in their position, the human resources manager will discuss the conditions of termination with them.

Giving South Africans more job opportunities and successfully bringing economic transformation will continue to be a challenge for both the South African Government and its trade unions. The Chinese model, which prioritizes laborers' basic education and skills, will hopefully have an influence on South African labor policy.